Court Fight Over Biofuels Mandate Intensifies as Hill Action Stalls

JOHNSTON, IA: A decal advertising E85 Ethanol is displayed on a gas pump at a Kum and Go gas station on August 7, 2012 in Johnston, Iowa. An exceptionally hot summer and the worst drought in more than a half century has caused cut prospects for the U.S. corn crop to a five-year low and has sent prices up to over $8.00 a bushel in late July trading. The price surge and limited supply has also prompted ethanol plants to voluntarily slow production by 20 percent, a two year low.National Journal

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As the Environmental Protection Agency prepares to issue the 2014 federal mandate for biofuels production later this month, EPA attorneys continue to fight what has become an annual legal battle over the renewable-fuel standard, or RFS, set for the previous year.

The latest development in the ongoing litigation is a request by biofuel producers to intervene in an oil-industry lawsuit challenging the 2013 RFS. The suit contends that EPA overreached in setting the amount of cellulosic biofuels, including corn ethanol, to be blended in the nation's gasoline supply this year.

"We want EPA to revise its methodology for determining the amount of cellulosic biofuels required by the RFS so that it accurately predicts what will be in the marketplace rather than setting aspirational targets that don't align with reality," said Rich Moskowitz, general counsel for the American Fuel & Petrochemical Manufacturers (AFPM), a plaintiff in the case. "When EPA gets the numbers wrong, it hurts refiners. There cannot be uncertainty in the market."

But biofuels producers worry that the lawsuit could dismantle the mandate established by Congress in 2005 to help wean the country off foreign oil.

"If this lawsuit alters the rule in any way, biofuels producers will feel the impact of that the most; and there is no other party that can adequately represent our interests in this court case, so that's why we're asking for the ability to intervene," said Paul Winters, communications director for the Biotechnology Industry Organization. BIO, along with Growth Energy and the Renewable Fuels Association, filed a motion last Friday with the U.S. Court of Appeals for the D.C. Circuit requesting the right to intervene in the case against EPA.

The lawsuit challenging the 2013 renewable-fuel standard was filed by AFPM; Monroe Energy, a refiner owned by Delta Airlines; and the American Petroleum Institute, the trade association for the oil and gas industry. The industry groups contend that the amount of cellulosic biofuels set by the standard is higher than the market can supply.

If the motion is granted, the biofuels producers will be allowed to square off against the oil and gas industry in court, with the ability to respond directly to arguments brought against EPA in setting the standard.

This isn't the first time the mandate has faced legal challenges, and it likely won't be the last. The American Petroleum Institute contested the 2012 RFS rule-making, while AFPM challenged the 2011 standard.

The action in federal court comes as legislation to revise the renewable-fuel standard is stalled in Congress. A number of lawmakers — including Reps. Bob Goodlatte, R-Va.; Jim Costa, D-Calif.; Peter Welch, D-Vt.; and Steve Womack, R-Ark. — have put forward proposals to amend the standard, but so far the House has taken no action, not even in committee.

And as inaction becomes the new normal on Capitol Hill, advocacy organizations may increasingly turn to litigation as their best hope for changing federal policy.

"You're seeing a rise in either actual litigation or the threat of litigation," said Joshua Rosenstein, a counsel with the Washington law firm Sandler Reiff Young & Lamb. "Advocacy groups are being stymied because the government hasn't been doing much and they've had to get creative; and one of the things I've heard people talking about across the industry is seeking policy changes through the courts."

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